The straddle option is a neutral strategy in which you simultaneously buy a call option and a put option on the same underlying stock with the same expiration date and strike price. As long as the underlying stock moves sharply enough, then your profit is potentially unlimited.

Can you lose money on a straddle?

Maximum risk Potential loss is limited to the total cost of the straddle plus commissions, and a loss of this amount is realized if the position is held to expiration and both options expire worthless. Both options will expire worthless if the stock price is exactly equal to the strike price at expiration.

Is a straddle option Safe?

The risk in this trade is that the underlying security will not make a large enough move in either direction and that both the options will lose time premium as a result of time decay. The maximum profit potential on a long straddle is unlimited.